How Much Does It Cost To Build A House?

How Much Does It Cost To Build A House?

Whether you custom build your dream house or use a developed lot, building a home can be a daunting and expensive process. And, unfortunately, because there are many customizable build options, it can be challenging to determine how much it will actually cost to build a house.

In this article, we explore the key factors that will determine the cost of building a house and offer tips to help you estimate the size of the budget needed for your project.

How much does it cost to build a house?

According to the latest National Association of Home Builders (NAHB) construction cost survey, it costs an average of $392,241 to build a house. This same survey segmented the cost percentage of a “new construction” home’s sales price into:

60.8% Total Construction Costs 17.8% Finished Lot Costs 9% Builder Fees 5.1% Overhead and General Expenses 3.6% Sales Commission 1.9% Financing Cost 0.7% Marketing Cost

Source: Cost of Constructing a Home, February 2023, National Association of Home Builders (NAHB)

Without talking to a general contractor, an accurate ballpark home cost can be tough to estimate. But by examining major factors like regional costs, home upgrades, and square footage, you can put together a decent estimate of how much it costs to build a house.

Factors that affect the cost of building a house

Three key things affect the cost of building a house: where it is built, how big it is, and whether it’s fully custom-built or part of a development lot. 


The most significant factor in the cost of building a house is location. Building costs can vary dramatically depending on where you want to live. According to the latest US Census on New Single-Family Houses Sold by Price per Square Foot, the average building costs per square foot by region are:

  • West: $217.11 per square foot
  • Northeast: $212.18 per square foot
  • Midwest: $159.11 per square foot
  • South: $155.10 per square foot

If you live in the West or Northeast of the United States, it will be significantly more expensive to build the same house than in the Midwest and South regions. You can also face additional building costs and restrictions depending on the city, county, or state within each region.

Square footage

The US Census Bureau revealed that the current average single-family home size is 2,559 square feet of finished floor space. Once you know the square footage of your new home, you can multiply it by your region’s average building cost per square foot to get a base estimate for the cost of building a house.

We’ve also created a handy table to get you started:

House size by square footage

Custom build or developed lot

Building a custom home comes with additional costs over buying a home within a development. Custom-home buyers will need to hire an architect which can cost between $2 and $15 per square foot. Then they may need electricity, plumbing, and roads to reach the main networks depending on the lot.

As building a custom home can be expensive, many builders are shifting toward producing planned development communities. This allows developers and general contractors to offer more affordable new entry-level homes that are easier and cheaper to build. This gives the buyer some freedom for customization without the extra costs associated with a custom build.

Are you building a custom home and need a site plan? My Site Plan can create an aerial-view drawing of your property for permits, planning, zoning, HOAs, and more.

Upgrades that increase the cost of building a house

The NAHB survey points to eight stages of construction that factor into the cost of a house:

24% Interior Finishes 20.5% Framing 17.9 % Major Rough-ins 11.8% Exterior finishes 11% Foundation 7.4% Site Work 5.9% Final Steps 1.5% Other Costs

Source: Cost of Constructing a Home, February 2023, National Association of Home Builders (NAHB)

Many of these stages can dramatically affect the price of the home based on customization and upgrades.


Laying the foundation is the first step in a new build. How much land needs to be cleared, graded, or the foundation’s complexity will factor into the cost of the foundation and contribute to around 11% of overall construction costs. Foundations cost on average around $43,000


Depending on the complexity of the house design, framing can incur additional costs. The cost of framing includes labor, materials, and hiring subcontractors. Framing costs on average just under $61,000.

Major rough-ins

Major rough-ins on a new home include HVAC systems, electrical, ductwork, plumbing, and other fixtures. The layout of the house can significantly affect the cost of installing these systems. These systems cost on average just over $70,000.

Exterior finishes

Exterior finishes include the house wrap, insulation, siding, windows, and doors. Materials for each of these finishes can vary in the price range. The average exterior finishes cost just over $46,000.

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Interior finishes

The most significant factor in construction costs is interior finishes. These finishes include insulation, drywall, flooring, countertops, cabinets, fixtures, sinks, faucets, paint, appliances, and lighting. And each of these finishes has a broad range of costs depending on the upgrades that you choose. The average for total interior finishes is just over $94,000.

Additional costs

Other costs that can affect building a house include landscaping, cement for walkways and driveways, porches, home theaters, garages, pools, and sports courts.

Tips for determining the cost of building a house

When determining the cost of building a house, a few useful tips to remember include:

  • Create a detailed construction contract with your general contractor.
  • Pick a floor plan that works best for your family with little additional customization. Each change costs extra.
  • Pad your budget for each stage of construction to minimize surprises.
  • Determine your style for interior finishes and price out the cost for major finishes early.
  • Upgrades are always desirable, but even the little upgrades add up.
  • Add another 10% to your budget for the unexpected because something always comes up.

FAQs about the costs of building a house

Let’s answer some frequently asked questions regarding how much it costs to build a house.

Where is it cheapest to build a house in the US?

According to the US Census, it’s cheapest to build a house in the South of the US, where it costs $155.10 per square foot on average, though building a house in the Midwest only costs an extra $4.01 per square foot. This is significantly less than in the Northeast and West, where it costs $212.18 and $217.11 per square foot. 

Is it cheaper to build or buy a house?

Various factors, including location, current real estate market conditions, materials costs, labor costs, and your specific preferences and needs will determine if it's cheaper to build or buy a house.

The best approach is to find out how much it would cost to buy a house in your chosen area, and then estimate the costs of building the same size house in that same area, then compare the two to figure out the best route for your specific situation.

What is the most expensive part of building a house?

According to the NAHD, interior finishes are the most expensive part of building a house, making up almost a quarter of the overall construction cost. Cabinets and countertops, as well as drywall, interior trims, doors, flooring, and painting contribute to the high costs of interior finishes. 

What is the cheapest way to build a house?

There are different ways to reduce the costs associated with building a house. The cheapest way is to construct a barn-style house which is built using poles buried into the ground rather than a concrete foundation. This construction method saves significantly on foundation costs.

You can read more about cheap ways to build houses here. 

How long does it take to build a house?

How long it takes to build a new house will influence how long you need to keep paying for your current or rented accommodation. According to the US Census, it takes on average 8.3 months to build a house, though it’s best to factor in labor shortages and supply-chain issues and allow for a few months delay. 

Getting started

If you do your homework, you can come up with a decent ballpark budget for building a new house. Whether you decide to pick a development lot or build your custom dream home, you’ll be prepared for the extra costs.

Need help getting started on your new build or development? Contact My Site Plan for floor plans, site plans, subdivision design, 3-D design of your blueprint, and real estate marketing.

This article was originally published by Annie Rosellini on 2020-08-03. It was updated on 2024-03-22 by Ryan Crownholm, following the release of new data from the US Census and the National Association of Home Builders (NAHB). 

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  • Ryan Crownholm